9/4/09

Africa: G20 Finance Ministers Meet to Assess Economic Recovery

Merle David Kellerhals Jr.

Washington — U.S. Treasury Secretary Timothy Geithner says a meeting of the Group of 20 finance ministers in London is an opportunity to assess what is working and what is still needed to pull the global economy out of one of the deepest recessions in decades.

"If you look at where we are today versus where we were in March or April, I think it's reasonable to conclude that the force of the policy response that we put in place here and the G20 ... has been very successful," Geithner said at a September 2 press briefing in Washington.

"You're seeing now the first signs of growth ... in this country and countries around the world."

The Group of 20 finance ministers and

central bank governors are meeting

September 4-5 in London in preparation for

the G20 Summit in Pittsburgh, September 24-25.

The G20, which was formed in 1999, includes

19 of the world's largest national economies

and the European Union.

The Pittsburgh Summit is a follow-up to a similar

meeting held in London last April and

an earlier summit held in Washington in November 2008.

Also participating in G20 summits are

the managing director of the International

Monetary Fund (IMF), the World Bank president,

and the chairmen of the IMF's Financial

Committee and Development Committee.

The G20 countries represent about 90 percent

of the global gross national product and nearly

80 percent of world trade.

They also include two-thirds of the world's population.

Geithner said there has been a significant improvement in the basic confidence and stability of the world's financial markets, which is reflected in lower borrowing costs.

"Our emphasis is going to be on trying to make

sure that everyone understands that our basic

imperative is to make sure we have

the foundation in place for a self-sustaining

recovery led by private demand,

and that's going to require more work,"

Geithner told journalists.

In April, finance ministers and central bank governors

reached a consensus on a framework

of international financial reforms,

though making those reforms a reality is based

on legislating at the national level

to make them operational, Geithner said.

"We're going to be outlining a framework of principles to begin the discussion -- not to reach agreement on, but to begin a framework or discuss a framework of principles on a new international capital accord that will put in place -- again, once the crisis is behind us -- a more conservative framework of constraints on leverage in the financial sector across the major, globally active financial institutions," Geithner said.

This, Geithner said, is a critical part of making

the global financial system more stable and

reducing the risk that in the future another crisis

could occur with a failure of large, individual

financial institutions, which could threaten

the overall stability of the financial system.

"That's not something that we can accept.

And a critical part of preventing that in

the future is to know that the system will require

more conservative, carefully designed,

comprehensive standards for capital and

liquidity management for these

major institutions," he said.

German Chancellor Angela Merkel and French President Nicolas Sarkozy are expected to press G20 leaders to limit the size of banks, regulate executive bonuses and tighten capital requirements. Many international economists and world leaders have expressed concerns that a lack of sufficient regulation on banks and financial institutions contributed to the recession and its aftermath.

Geithner said he and his fellow finance ministers will not talk about numbers at this meeting, but about a framework for principles, and also begin talking about timetables for future regulatory commitments.